Inflation rates have recently slowed after reaching record highs, but the damage to Americans’ purchasing power has already been done, impacting virtually everyone regardless of their income or profession.
A recent investigation by Moneywise reveals that an alarming 97% of jobs have not kept pace with inflation over the past five years, and projections indicate that salaries may fall even further by 2028. Using data from the Bureau of Labor Statistics (BLS), the Federal Housing Finance Agency (FHFA), and Redfin, the report found that salaries have decreased by an average of 8.2% since 2019 when adjusted for inflation. Conservation scientists and foresters have experienced the most significant reduction in pay, with their salaries falling by over 21%.
Here are the top three industries where salaries have lagged the most behind inflation.
3. Engineering
5-year average salary change: -11.59%
Engineering, traditionally seen as a lucrative field, has not been immune to the impacts of inflation. While many engineers still earn salaries exceeding $100,000, these wages have not kept up with inflation, resulting in a substantial reduction in real income. Bioengineers and biomedical engineers have been hit the hardest, with a 17% decline in salaries over the last five years.
The tech industry, a significant employer of engineers, has also faced challenges. Major companies like Google and Amazon have implemented significant layoffs, affecting employee earnings. A tech salary report from Dice indicated that tech salaries fell from 2022 to 2023 as companies scaled back hiring efforts.
2. Real Estate
5-year average salary change: -11.72%
The real estate industry, despite a significant rise in home prices, has seen a notable decline in salaries for those managing and assessing properties. Home prices have increased by an average of 56% over the past five years, but this surge has not translated into higher incomes for real estate professionals.
Property, real estate, and community association managers have experienced a salary decline of over 13%, while property appraisers and assessors have seen their pay decrease by more than 10%. Real estate agents have also been affected; average annualized Realtor commissions peaked at $84,355 in January 2021 but dropped to $56,632 by April 2023, according to Axios, citing data from Reventure Consulting. The downward trend in Realtor commissions is expected to continue following a significant legal ruling against the National Association of Realtors.
1. Sales
5-year average salary change: -11.78%
The sales industry, encompassing roles in insurance, financial services, wholesale, and manufacturing, has seen the most significant impact on salaries. Sales managers and securities, commodities, and financial services sales agents have experienced salary reductions exceeding 11.7%. Projections suggest that by 2028, the median salary for sales managers will drop from $135,160 to $119,333.
Several factors contribute to the declining salaries in sales. Companies are scaling back on investments, acquisitions, and hiring due to inflation and higher interest rates. The retail sector serves as a stark example, with numerous stores and restaurant chains filing for bankruptcy or announcing closures amid decreased consumer spending.
Overall, the failure of salaries to keep pace with inflation across these industries highlights a broader economic challenge. While some sectors and roles have been hit harder than others, the trend points to a widespread erosion of purchasing power for American workers. As inflation continues to shape the economic landscape, addressing the gap between wage growth and inflation will be crucial for ensuring financial stability and prosperity for the workforce.
